Dealing with Debt
You are probably worrying about college, whether you will get in or be able to afford your dream school. You might also worry about carrying too much debt when it comes to student loans. I’m here to tell you that debt isn’t always bad.
You might say, “But isn’t debt owing someone? And isn’t owing things bad?” In theory, yes. In reality, that may not be the case. I used to be an uncultured person who thought that debt was completely bad and unnecessary and wanted to eradicate it utterly. But I realized soon after, having debt can have benefits.
You might incur some debt as you get older and more worried about your financial life. Of course, having too much debt is not ideal. I personally think having debt is okay if you have the resources on hand to pay it back if a situation calls for it.
When you pay back your debts, you also have to pay interest. Start paying back more on debts with the highest interest rates. Debts like these can include credit cards. Then, you can pay back loans with lower interest rates like student loans.
As mentioned before, debt can be a boon. Having debt means you have borrowed money from a financial institution and might have paid the required payments when they come. This can give a tremendous boost to your credit history and credit score because it shows you are reliable with paying back loans.
A downside of people who don’t want debt don’t consider is the fact that if you have no debt, you don’t have a credit history or a credit score. In this situation, you may be turned away when asking to borrow a loan.
Another benefit of debt is that it can be used to earn money. This comes into play in investing in stocks, forex, exchange-traded funds (ETFs), etc. Debt is used as leverage to capture abnormally large gains, but there is a high risk in large losses.
From all these benefits, I hope that they have helped you in finding your own opinion on how you can use debt best to your advantage. Until next time, go on to be a Teen Trillionaire!
Written by Allie Chang